6-7 and 6-8 Exercise 6-7B Special order decision Wilcox Automotive Company manufactures an...
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6-7 and 6-8
Exercise 6-7B Special order decision Wilcox Automotive Company manufactures an engine designed for motorcycles and markets the product using its own brand name. Although Wilcox has the capacity to produce 50,000 engines annually, it currently produces and sells only 30,000 units per year. The engine normally sells for $540 per unit, with no quantity discounts. The unit-level costs to produce the engine are $192 for direct materials, $180 for direct labor, and $36 for indirect manufacturing costs. Wilcox expects total annual product- and facility-level costs to be $648,000 and $900,000, respectively. Assume Wilcox receives a special order from a new customer seeking to buy 1,000 engines for $384 each. Required Page 295 Should Wilcox accept or reject the special order? Support your answer with appropriate computations. LO 6-2 Exercise 6-8B Identifying qualitative factors for a special order decision Required Describe the qualitative factors that Wilcox should consider before making the decision described in Exercise 6-7B
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